Global stocks rallied with commodities after the initial shock of Donald Trump’s election victory gave way to optimism that his plans for fiscal stimulus will provide a boost to the global economy. Government bonds tumbled, while gold retreated back below the $1,300/Oz handle and the yen weakened as demand for safe haven assets waned.
- Wholesale inventories in September gained 0.1% from a month earlier, less than the 0.2% expected.
- The S&P 500 Index rebounded sharply, gaining 1.1% in New York last night despite future contracts tumbling as much as 5% yesterday, amid speculation Donald Trump and a Republican-controlled Congress will pursue business-friendly policies.
- Among the biggest gainers were banks, drug makers, and defence & infrastructure shares. Big losers include gun-makers, hospital operators and clean/renewable energy stocks.
- Treasuries tumbled, with 30yr bond yields climbing the most in more than 5 years, as investors bet that a Trump government will ramp up spending and thus stoking inflation. A bond-market gauge of inflation expectations climbed to the highest since July 2015.
- The benchmark 10yr yield climbed 22bps to 2.07% in New York, but pared some of its gains earlier today to 1.99%.
- The greenback rallied against most major peers as Trump’s conciliatory speech calmed market participants. The Bloomberg Dollar Spot Index gained 1.4%, the most since Brexit.
- Pricing for a December rate-hike rebounded and is back near 80%, according to Fed funds futures data on Bloomberg, as many strategists and economists are still sticking to their calls for a rate hike next month.
- According to a Wall Street Journal report, Trump isn’t seeking to oust Yellen though she might not get a second term, citing an economist who advises Trump.
- Questions are getting raised about Trump’s policy towards China. According to a Lewis Alexander, a former Federal Reserve and US Treasury official, Tump will probably follow through with his pledge to label China a currency manipulator on his first day in office.
- The move may complicate relations between the world’s two largest economies, with both countries being each other’s biggest trading partners.
- According to Bloomberg strategists, the link between economic growth and international trade indicates countries such as Japan and Singapore would be among the most vulnerable in Asia to any rise of US protectionism when Trump becomes president. A 1% drop in world trade volume could reduce Singapore’s GDP by about 0.66%.
- Home loans in September surprisingly rose by 1.6% month-on-month, better than the expected 1.6% drop forecasted.
- Aussie bonds tumbled today, sending 10yr yields up by the most in more than 3 years and adding to a global debt-market selloff that followed yesterday’s shock election of Donald Trump as US president. The benchmark Australian yield rose as much as 28bps to 2.51%, the highest level in 6 months.
- Spot gold endured a busy and volatile past 24 hours, rising initially yesterday to more than a one month high of $1,337.28/Oz, before paring gains back to the $1,270/Oz handle late last night. The precious metal is currently 1.3% lower for its current session at $1,286.85/Oz.
- Wednesday was the heaviest trading day ever for gold, with more than 780,000 futures contracts changing hands by 2:30pm NYT, surpassing the volume on the day of Brexit and exceeding its 100-day average volume by more than 5 times.
- Spot silver ended its previous session 2.4% higher, but, like gold, has been see-sawing between intraday highs and lows since yesterday and is currently 0.4% lower at $18.6788/Oz.
- Crude oil for December delivery reversed an earlier 4.2% slide, to close 0.7% higher in New York at $45.27/bbl.
- According to an Energy Information Administration report, US crude inventories rose by 2.43 million barrels last week, while crude output expanded for a fourth week to 8.7 million barrel a day.
- Spot 1.3983
- USDSGD advanced 0.7% to 1.4000 earlier today, following overnight US dollar strength.
- On a longer-term basis, the currency pair may find decent support at the 1.3800 level and some resistance at its current 1.4000 psychological handle. Momentum seems to be on the upside though, and the key resistance remains at 1.4200.
- Spot 0.7677
- AUDUSD pared losses, rebounding off the 0.7600 low from yesterday.
- AUDUSD swung wildly over the past 12 hours, rising 1.0% to a 6-month high of 0.7778 last night, before reversing gains to 0.5% lower at 0.7660 earlier this morning.
- The key resistance remains at 0.7835, while to the downside, the main support resides at 0.7500.
- Spot 1.3406
- USDCAD retreated after rising to its highest level since March amid worries that Donald Trump’s US election victory may hamper trade between the US and Canada. The currency pair continues to trade around the 1.3400 handle.
- In his campaign, Trump has vowed to renegotiate NAFTA and his push for a more isolationist US could lead to higher inflation, which may trigger higher US interest rates just as the BOC may be considering easing policy.
- Spot 6.8093
- Onshore and offshore yuan fell to their weakest level since September 2010, tracking Asian peers as the US dollar strengthened on expectations that the new US president will stoke growth and inflation.
- USDCNH rose 1.0% to 6.8383, breaking beyond the key 6.8000 level.
- The PBOC set its fixing rate 0.08% weaker at 6.7885, the weakest in 6 years although it was still stronger than what most economists were expecting.
- Spot 105.64
- USDJPY reached its highest level in more than 3 months, gaining 2.8% to 105.96, and reversing upon yesterday’s 3.2% decline.
- The sharp reversal from yesterday’s plunge and the breach of the 105 level suggest more upside to the currency pair. The next target bring the 200-day moving average of 106.50.
- Spot 1.2439
- GBPUSD continues to be supported above the 1.2400 handle, despite overnight USD strength.
- The 1.2100 handle remains a key support level, while 1.2800 acts as an important resistance handle.